PROJECT 7: Long-term Consequences of Pension Cash-Out When workers change jobs or retire they often cash-out pension rights rather than annuitizing them. Their choices will affect their long-run economic status, including the economic status of a surviving spouse. On an aggregate level, the choices will affect the poverty rate among the oldest-old, and the level of public expenditures on Medicaid, Supplemental Security Income, and other public assistance programs that support the poor. This proposed research will estimate the long-run consequences of those choices based on data from Health and Retire Study (HRS) and its companion surveys. The research will proceed in three broad steps. It will first extend to on-going descriptive models of pension cash-out to future waves of HRS. These models will relate the choice to survival probabilities, health status and economic status. Then based on the observed distribution of economic resources at 65 and estimate rates of wealth change by age, the project will forecast the economic status of a representative sample of the post-retirement population. In the second major phase the research will develop and estimate a life cycle model of consumption choice behavior. The main determinants of consumption are mortality risk, the mix of bequeathable wealth and annuity income, and any bequest motive. The model will be used to forecast the economic status of a representative sample of the post-retire population, and it an be used to simulate the effects of changes in the environment such as survival rates, the rate of annuitization of pensions or transitions in marital status. The third phase will develop and estimate a behavior model of pension cash-out choice, and use that model to forecast the economic status of a representative sample of the post-retirement population. The model can be used to find the effects of changes in the determinants of cash-out choice such as the provision for actuarially fair annuities.